Specialty Foods Group Income Fund Announces Financial Results for the Second Quarter of 2008

TORONTO, Aug. 26, 2008 (Canada NewsWire via COMTEX) -- SFGUF | Quote | Chart | News | PowerRating -- Specialty Foods Group Income Fund (the "Fund") (NEX: HAM.UN.H) today announced financial results for the quarter ended June 28, 2008. The Fund indirectly holds an interest in Specialty Foods Group, Inc. ("SFG" or the "Company").

EBITDA from Continuing Operations for the second quarter of 2008 was $4.9 million compared with $5.5 million in the second quarter of 2007.

Operating income from Continuing Operations for the second quarter of 2008 was $2.7 million compared with $3.0 million for second quarter of 2007. Net sales for the quarter were $71.1 million compared with $71.3 million in the second quarter of 2007. Sales volume decreased by 0.8 million pounds in the same period. This decline was due primarily to a reduction in private label business, which was partially offset by higher net sales and volume in other product lines. Average selling price increased by $0.03 per pound. However, cost of goods sold increased by $0.02 per pound, and selling, general, and administrative expenses increased by $0.02 per pound. Operating income decreased from $0.08 per pound for the second quarter of 2007 to $0.07 per pound for the second quarter of 2008.

Nathans and SMG have reached an agreement regarding SMG's Motion for Preliminary Injunction filed on March 26, 2008 asking the Court to order Nathan's not to terminate the Agreement until after a trial on the merits. After several months of negotiation, Nathan's agreed not to terminate the Agreement until a date within six months after a trial on the merits and any appeal period has run. The parties filed, and the Court entered, a stipulation formalizing this agreement, which prevented Nathan's termination from taking effect on July 31, 2008. By the parties' agreement and Order of the Court, the Agreement remains in effect. We continue to abide by the existing contract with Nathan's Famous Systems Inc. ("NFSI") and are taking the appropriate steps to protect our rights within this agreement.

A recap of the selected financial and operating information follows.

<< Selected Financial Data Results of Operations for the Quarter Ended June 28, 2008 and June 30, 2007. Quarter Ended Quarter Ended (in thousands of U.S. dollars) June 28, 2008 June 30, 2007 ------------------------------------------------------------------------- Net Sales $ 71,095 $ 71,266 Cost of Goods Sold 58,454 58,854 ------------------------------------------------------------------------- Gross Profit 12,641 12,412 Selling, General and Administrative Expenses 7,695 6,957 Amortization 1,172 1,167 Restructuring 1,034 1,291 ------------------------------------------------------------------------- Operating Income 2,740 2,997 Loss on Sale of Fixed Assets - - Gain/(Loss) on Foreign Currency Translation & Transactions (614) (7,131) Amortization of Deferred Financing Fees and Debt Discount (731) (743) Interest Expense (3,528) (3,434) ------------------------------------------------------------------------- Income/(Loss) from Continuing Operations before Income Taxes (2,133) (8,311) Income Taxes 18 - ------------------------------------------------------------------------- Income/(Loss) from Continuing Operations before Non-Controlling Interest (2,151) (8,311) Non-Controlling Interest in Continuing Operations (91) (830) ------------------------------------------------------------------------- Income/(Loss) from Continuing Operations $ (2,060) $ (7,481) Income from Discontinued Operations before Non-Controlling Interest (79) 1,180 Non-Controlling Interest in Discontinued Operations (21) 447 ------------------------------------------------------------------------- Income from Discontinued Operations $ (58) $ 733 ------------------------------------------------------------------------- Net Income/(Loss) $ (2,118) $ (6,748) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Calculation of EBITDA from Continuing ------------------------------------- Operations: ---------- Net Income/(Loss) from Continuing Operations $ (2,060) $ (7,481) Non-Controlling Interest in Continuing Operations (91) (830) Amortization 1,172 1,167 Loss on Sale of Fixed Assets - - (Gain)/Loss on Foreign Currency Translation & Transactions 614 7,131 Restructuring 1,034 1,291 Amortization of Deferred Financing Fees and Debt Discount 731 743 Income Taxes 18 - Interest Expense 3,528 3,434 ------------------------------------------------------------------------- EBITDA from Continuing Operations - U.S. $ $ 4,946 $ 5,455 EBITDA from Continuing Operations - Cdn $ $ 4,997 $ 5,991 ------------------------------------------------------------------------- ------------------------------------------------------------------------- >>

The full report for the Fund has been filed with the Canadian securities regulatory authorities and is available on the internet at the System for Electronic Document Analysis and Retrieval (SEDAR) website (www.sedar.com) and may be downloaded from the company's website (www.sfgtrust.com).

Specialty Foods Group Income Fund is an open-ended, limited purpose trust established under the laws of the Province of Ontario, which indirectly holds an interest in SFG. SFG is a leading independent U.S. producer and marketer of premium branded and private-label processed meat products. SFG sells a wide variety of products such as franks, hams, bacon, luncheon meats, and delicatessen meats. These products are sold to a diverse customer base in the retail (e.g. supermarkets) and foodservice (e.g., restaurants) sectors. SFG sells products under a number of leading national and regional brands, such as Nathan's, Field, Fischer's, Mickelberry's, and Scott Petersen as well as on a private-label basis.

This news release contains forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors outside of management's control. The Fund does not assume responsibility for the accuracy and completeness of those forward-looking statements and does not undertake the obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

<< The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. >>

%SEDAR: 00018733E

SOURCE: Specialty Foods Group Income Fund

Steve Wright, Chief Financial Officer, Tel: (757) 952-1200, Email: investorrelations@sfgtrust.com, Website: www.sfgtrust.com

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